Negative influence on economies dismissed by Australian foreign minister Fears that China's spectacular growth could undermine other East Asian economies are unfounded, Australian Foreign Minister Alexander Downer said yesterday. 'Rather than being a negative for the region as is sometimes argued, China's rise is creating new opportunities,' Mr Downer told a meeting of Australian and Chinese business leaders in Sydney. He dismissed the concerns of some economic analysts, who fear that China's rapidly expanding manufacturing sector will 'hollow out' other economies in the region. Launching a government report on China's economic progress, he said analysis showed such arguments were unfounded. 'Alarmist scenarios of widespread 'hollowing-out' are clearly unjustified.' Some regional industries were moving out of labour-intensive sectors to compete less directly with China, he said, while others were taking advantage of China's abundant labour supply and cheap manufacturing costs to underpin their own development. China's demand for raw materials, components and capital equipment was fuelling growth among corporations throughout East Asia in what amounted to a 'positive sum game', he said. 'By developing new markets and maintaining old ones, most developing economies are achieving strong export growth, even in sectors where they compete with China,' Mr Downer said. Noting that Chinese merchandise exports have doubled since 1996, he said China's industrial growth was acting as an 'engine of growth' for the whole of East Asia. 'China's industrial rise is clearly a major boon for the region and the world. 'Rather than poaching manufacturing from more advanced economies such as South Korea, Taiwan or Hong Kong, China [is] importing high-value components for the production of computers, televisions and other electronic items. [China is] thus becoming 'integrated into regional production chains',' Mr Downer said. In a foreword to the report, the Australian Financial Review, the country's main business newspaper, said the report was probably correct in emphasising China's 'complementarity' with other regional economies. But it warned: 'The rise remains so rapid that widespread regional concern about competing with China for investment and markets will persist for some time.' Mr Downer said Australia was ideally suited to benefit from China's rapid industrial growth due to the openness and flexibility of its economy, with Australian minerals and energy resources complementing the nation's development needs. 'Just as Australian raw materials helped fuel the first wave of economic modernisation in Japan and South Korea several decades ago, we are now well placed to supply China's continuing rapid growth,' he said. President Hu Jintao's four-day visit to Sydney and Canberra last week underlined the growing importance of the economic and political relationship between the two countries. Mr Hu became the first Asian leader to address the Australian parliament, an honour previously granted only to American presidents. The two sides signed a deal under which Beijing plans to buy an estimated A$30 billion (HK$164 billion) worth of Australian liquefied natural gas over the next 25 years - the biggest single export contract in Australian history, eclipsing a similar deal with Guangdong last year. China and Australia also agreed to a free-trade agreement feasibility study by 2005. Trade between the two has almost tripled since the mid-1990s to A$22 billion, making it Australia's fastest-growing major trading relationship. China is now the country's third-largest trading partner, after the US and Japan. Two-way investment has grown by an average of 20 per cent a year in the past decade. On Taiwan, Mr Downer said Australia supported the one-China policy and said any move by Taiwan to declare independence would be provocative, regretful and 'a major mistake'. Referring to US President George W. Bush's one-day visit to Australia last week, he said: 'This was a concern which we discussed with the US leadership as well, who agreed such steps would have a negative outcome for regional stability. It is very important that on both sides of the Taiwan Strait there is no provocation.' Noting that Taiwanese investment on the mainland amounted to more than US$60 billion, Mr Downer said he hoped that 'economic links will provide the substructure on which a political superstructure can be built'. China's manned space mission was a sign of the nation's progress, he said. On building human rights, he said that Australia had 'successfully engaged the Chinese authorities, at a practical level'.